WiFi Startup Zenreach Emerges From Stealth With $50 Million And Peter Thiel On Its Board

Jack Abraham's idea was so simple that for three years, he kept his startup quiet. On
LinkedIn it was simply "new company." And he raised $50 million across three rounds of funding without a peep to the press.

The startup has grown quickly despite the low profile. One-third of the city of San Francisco has logged into Abraham's startup without ever realizing. So as Abraham looks to double his company's headcount from 150 to 300 employees and open an international office in Dublin, he's finally ready to unveil his project, Zenreach—and reveal that billionaire investor and anti-Gawker crusaderPeter Thiel has joined its board.

Zenreach promises to solve a headache that merchants have complained about for years, telling them how many times a customer really returned in person to their store. Abraham, who sold a local shopping site called Milo.com to
eBayin 2010, saw a gap in a store owner's knowledge of their customer from their online activity to their offline. His solution was to use WiFi as a carrot for visitors to make them gladly share that information. Zenreach offers merchants a piece of hardware that allows them to create a customizable log-in portal to free WiFi for their patrons. When the visitors log-in, they share an email address; that address can then be monitored on later visits to determine how often the shopper returned to the store.

"If you run a brick-and-mortar business, getting a click-through rate doesn't really matter; it doesn't drive your business," says Abraham, who wrote a blog post on the news. "But do people come back?" Zenreach believes the answer is a new metric it hopes to popularize called a "walkthrough rate," the number of walk-ins to a location caused by use of the platform. Because stores know the average spend of a shopper per visit, they can then easily figure out how much they're making off a customer. Zenreach also offers marketing templates and creates customer segments to make it easy to set a trigger such as an automated email to go out to each one-time frequent shopper who doesn't visit for 90 days.

Zenreach already employs 150 people and plans to double that amount with its latest investment, a $30 million Series B round led by Peter Thiel through Founders Fund. The startup had previously raised an unannounced $16 million Series A round and $4 million seed round from investors including Formation 8, whose cofounder Joe Lonsdale is on the board, as well as others including Bain Capital Ventures, First Round Capital, Felicis Ventures, and SV Angel.

Backing Zenreach as a board member is a relatively rare move for Thiel, who has diversified his interests away from early-stage venture capital to include later-stage investments, active support of Donald Trump's presidential campaign and an apparent effort to bankrupt Gawker by funding litigation against the news site. Abraham says he met Thiel through an investor in his previous company, Thiel's former
PayPal colleague Keith Rabois. But the founder says he hasn't talked politics with his new board member, who is scheduled to speak publicly about Trump at the Republican National Convention. "Peter is one of the most brilliant business strategists in history, and I'm privileged to work with him," he demurs. "I reserve judgment on someone's views until I can talk with them directly. I would be super interested to do that and have the conversation, but I want to be respectful."

Many small businesses feel burned by their experience working with tech companies in the past such as Foursquare, Groupon and Yelp, says Zenreach's founder. Those companies built out as big a user base as they could and then tried to find a product that helped merchants second, says Abraham. The ubiquity of the need for WiFi, he argues, means that Zenreach's insights are more consistent and reliable to base decisions on.

Zenreach's business seems to compete with several genres of startup also looking to close the loop on offline to online sales. Some use algorithms and large data sets to match customers to a high degree of accuracy across devices including their phones; others plan to use beacons to notice a phone through Bluetooth and follow a shopper around from one to the next. Abraham says Zenreach's WiFi is simpler and provides a clear incentive to the shopper so that they actively want to seek it out to unlock a special deal or simply get messages more reliably at a crowded bar.

"There's no silver bullet for this problem," Abraham says. "There may be more ways in the future to better quantify their return on investment, but this is the right first step."